[OPINION] After the Deviations, the Recovery

For several months, the government of Navin Ramgoolam has faced criticism, public impatience, and political attacks regarding its economic choices. Some measures have been unpopular, particularly concerning pensions, while others have been labeled as "austerity." However, amidst the noise, a reality is slowly emerging: the reforms initiated are beginning to show their first results. And it's not just the ministers who are saying this, but international institutions like the IMF and Moody’s.

Moody’s has noted "tangible initial progress" made by Mauritius in its budgetary consolidation. The observation is clear: in the first eight months of the current fiscal year, government revenues have risen by 7.8%, while public spending has decreased by 3.9%. As a result, the budget deficit, which reached 9.3% of GDP in the previous fiscal year, has been reduced to around 5.5% of GDP. This is not just a technical detail; it represents a significant correction in trajectory.

In other words, Mauritius is finally starting to gradually emerge from a dangerous mindset where the state spent significantly beyond its means. Of course, this process is not without political pain. Some measures have been unpopular, particularly regarding pensions. Discontent is real. However, one must also have the courage to state a simple truth: a country cannot achieve sustainable recovery without fiscal discipline.

This is precisely where the current administration differs from the previous MSM government. For years, Pravind Jugnauth and Renganaden Padayachy maintained an economic illusion based on easy spending, massive borrowing, and extremely risky monetary policy. The most striking symbol remains the colossal transfer of Rs 60 billion from the Bank of Mauritius to the government in 2020. In other words, the central bank's balance sheet was weakened to finance the state.

At that time, this operation was presented as an exceptional measure to support the economy. In reality, it severely undermined the financial foundations of the country. Part of that money was used to finance current public expenditures and keep the state running with artificially created funds. Politically, it was appealing. Distributing money, massively injecting liquidity, and multiplying aid and popular announcements gives the impression of a prosperous economy. However, economically, it often amounts to postponing the bill for later.

For printing money without a real increase in produced wealth always ends up having the same effects: inflation, currency weakening, and a gradual loss of purchasing power. The rupee had depreciated significantly, making imports more expensive. The prices of food products, fuel, and essential goods had skyrocketed. The reserves and financial strength of the Bank of Mauritius had also been weakened after these massive transfers.

This is exactly what Mauritius experienced. And that’s not all. Under the previous regime, shadows accumulated, as evidenced by the toxic loans from the "Mauritius Investment Corporation" (MIC). At MauBank, the situation is also dire. According to the Prime Minister's revelations in Parliament, the bank inherited a portfolio of toxic loans of about Rs 5.1 billion, transferred in 2018 to a sister company, "EAMC Ltd," to clean up its balance sheet. There was also mention of a loan of Rs 675 million granted to "Kuros Construction Ltd" without sufficient guarantees, a debt that remains unpaid.

The same observation applies to the Casinos of Mauritius. The government is now considering divestment after nearly Rs 2 billion in losses accumulated between 2015 and 2025. Navin Ramgoolam also mentioned a 14th month bonus awarded under the previous regime just before elections, but backdated by two years. Thus, the real legacy of the MSM is a masked economy through spending, a central bank drawn into financing, weakened public institutions, dubious loans, massive losses, and a bill left for the next government.

In this context, it is too easy today to denounce "austerity" without recalling why it became necessary. The Ramgoolam government does not have the luxury of governing in illusion. It must repair, stabilize, reassure markets, and protect the most vulnerable at the same time. Governing also means preventing future generations from paying the price for irresponsible decisions.

This does not mean abandoning the population. On the contrary. Despite budget constraints, the government is trying to maintain several mechanisms to protect purchasing power, particularly through stabilization funds aimed at cushioning international price increases on certain essential products. The goal is now more balanced: to restore public finances without breaking social cohesion.

Of course, not everything is resolved. Public debt remains high. The global oil shock and uncertainties around the Chagos issue continue to weigh heavily on the economy. But one must acknowledge one thing: for the first time in a long time, Mauritius seems to be regaining economic credibility. And that inevitably requires difficult choices.

The easiest path would have been to continue borrowing, printing, and distributing. The hardest is to tell the truth to the nation: after years of excess, recovery demands temporary sacrifices to avoid much graver difficulties tomorrow. Criticism will continue. Political attacks will too. But while some still engage in political sloganeering, international institutions are watching the numbers. And the numbers are finally beginning to move in the right direction.